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‌Bank of England holds base rate at 5.25% again – here's what it means for your mortgage and savings

The Bank of England held its base rate at 5.25% for the third time in a row on 14 December. This rate is used by the central bank to charge other banks and lenders when they borrow money – and so it influences what borrowers pay and what savers earn.

The base rate has been held at 5.25% since August 2023 when it rose from 5%. This is the highest the base rate has been in 15 years.

Below we run through your savings and mortgage options following the decision to once more hold the base rate at its current level. For more information and tools to aid you in choosing the best deal for your mortgage, visit our Homes and Mortgages Hub. For savers, check out the best rates in our Top savings accounts guide.

I'm a mortgage borrower. What happens now?

Here are the key need-to-knows for mortgage borrowers: 

  • For those on a fixed mortgage deal, there's no change for now – though check for rates if your deal is ending soon. That's because the amount you pay WON'T change during the fixed period, regardless of what happens to the base rate. Though this also means you're locked in if interest rates come down.

    If you want price certainty and you're close to the end of your current term, you might want to search for a new mortgage deal now. You can usually lock in a mortgage offer six months ahead of time. This will give you insurance against any rate rises, plus the flexibility to switch to a cheaper deal if one launches before your current rate finishes. 

    If your fix is ending sooner you may want to consider a tracker that doesn't come with early repayment charges then, if rates come down over the coming months, you could move onto a fixed deal penalty-free at a time of your choosing. However, bear in mind that trackers are currently around one percentage point more expensive than the cheapest fixes.  

  • If you're on a tracker mortgage that 'tracks' the base rate, then again there's no change. Though as above, check if you can switch to a better rate if your deal is coming to an end. 

  • If you've got a standard variable rate (SVR) mortgage, these can already move at the whim of lenders. You're usually moved onto one after your fix or tracker ends. However, SVRs are typically more costly than fixed and tracker deals – the average SVR was 8.19% in mid-December. So, you should check if you can save by switching now. If you're waiting for fixed deals to come down, you may want to consider a tracker with no exit fees in the meantime. 

For more details on the pros and cons of locking in a product transfer or remortgaging early – check our Getting ready to remortgage guide.

Struggling with your mortgage? Read our What to do if you're struggling with your mortgage guide or – if you've already gotten behind on your mortgage repayments – our Mortgage arrears guide.

I'm a saver. What happens now? 

The first step to maximising your savings is to check what rate your provider is paying – if you're earning less than the top easy-access rate, which is currently 5.22%, you should consider switching. Our current best buys are as follows – you can also read MoneySavingExpert.com founder Martin Lewis's Savings masterclass from our weekly email on 28 November 2023, though bear in mind rates may have since changed:  

  • Up to 5.22% on easy access. The top payer is currently Metro Bank with a £500 minimum deposit and unlimited withdrawals. However, this rate will drop after a year so remember to keep an eye out so you can ditch and switch. Metro Bank has been in the news lately, so check you're happy to save with it.

    Another top payer is NatWest Group’s Ulster Bank at 5.2% with a minimum deposit of £5,000 with unlimited withdrawals.
  • Up to 5.51% on a notice account. Hampshire Trust Bank is offering 5.51% for 95 days' notice with a minimum deposit of £1.

    If you need a shorter notice period, Monument Bank offers 5.41% for 60 days' notice with a minimum £25,000 deposit. Or if you've less to save, Shawbrook Bank offers 5.23% for 45 days' notice with a minimum deposit of £1,000.
  • Up to 5.66% on a one year fix. Metro Bank currently offers the top rate at 5.66% with a minimum deposit of £500. As above, check you're happy to still save with Metro.

    Other top options include Habib Bank Zurich UK and Ziraat Bank via Raisin, which both offer a 5.5% rate. Habib's account comes with a minimum deposit of £5,000, while it's £1,000 with Ziraat.

See our daily-updated Top savings guide for the latest rates. Remember, if you've saved with an authorised bank in the UK, you benefit from the protection of the Financial Services Compensation Scheme – see our Savings safety guide for full details.

If you've made a considerable amount of interest on your savings and you're starting to pay tax on it, it you may want to consider putting that money in a cash ISA instead. For more information and the top rates, see our Top cash ISAs guide.

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